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Turning Candidates Into Franchisees

2016 United States of Franchising

Eli Robinson and Tim Gilboy

Friday, September 09 2016

Introduction

In the past 12 months, over 5.4 million people have visited FranchiseHelp.com, the internet’s leading resource on becoming a franchisee. Given the sheer volume of Americans seeking information about franchising from us, we’re in a unique position to look at how this breaks down across the nation.

At the highest level, there are a few conclusions that are impossible to ignore:

The South is not only the center of franchising in the U.S., but the differences between the South and the rest of the country have only gotten bigger. With the exception of Nevada, 11 of the top 12 states in terms of franchise interest are all contiguous across the South and Mid-Atlantic.

Georgia is on my mind! (And the minds of franchises hopefully…) The new champion of franchising is the Peach State. After coming in 3rd in last year’s rankings, Georgia leapfrogged Florida and Texas to take the top spot this year.

Nevada and Colorado continue to impress in spite of their geographic location. These two states are the lone centers of relatively positive franchise interest in the Western United States.

Without further ado, here’s the 2016 United States of Franchising.

State by State Rankings

Let’s start with a look at how states compare to each other in terms of their interest in franchising. The more green the state, the more people in that state are interested relative to that state’s population.

As we mentioned above, interest in franchising in the U.S. is dominated by the South, specifically Georgia, Texas, Florida, and Louisiana. It is interesting to note that this year only 15 out of 50 states have a positive relative interest.

2015 vs. 2016 Ranking Changes

One of the most surprising thing about this year’s analysis was how much certain states moved in the rankings. When you compare last year’s rankings to this year, here are the changes:

Fairly unsurprisingly, you see the majority of the big movement amongst the states toward to bottom of the rankings. States like Idaho, Kansas, and Alaska saw major jumps while West Virginia and Massachusetts fell quite significantly.

Of the more noteworthy risers, you see Bible Belt states Alabama, Tennessee, and Mississippi each rise fairly significantly. As mentioned. franchise interest is polarizing towards the South even more.

Of the most noteworthy fallers, California and New Jersey both suffered quite a bit. Given how populous each of those states are, that type of fall is something that franchisors looking to expand in those states should be quite concerned about.

2016 Absolute Franchise Interest

Just because a state has low relative interest doesn’t mean people there don’t want to open franchises. Here is the absolute interest in franchising by state:

It’s truly shocking to see that only 8 states account for almost 53% of the country’s total interest in franchising! This is a combination of high population / low relative interest states California, New York, Illinois, and Pennsylvania as well as high interest states Texas, Florida, Georgia, and North Carolina.

Methodology

This analysis represents two different types of interest in franchises, relative and absolute interest. For the purposes of simplification, any reference to simple “interest” is actually a reference to relative interest.

Absolute interest is simply a breakdown of the total number of leads that FranchiseHelp has generated irrespective of the population of the geography in question.

Relative interest is a comparison of the number of leads that FranchiseHelp has generated compared the population of that given geography. The formula looks like (Percentage of Total Leads – Percentage of U.S. Population) / Percentage of U.S. Population.

As an example, let’s look at the state of California. As far as absolute interest, California represents 10.0% of all the lead generated by FranchiseHelp. (It ranks 2nd behind Texas.) With regard to relative interest, this number is compared to the fact that California has 12.2% of the U.S. population. Therefore, the relative interest is (10.0 – 12.2) / 12.2 = -18%.

The breakdown of leads generated comes from FranchiseHelp’s proprietary data. State populations are from the U.S. Census Bureau’s 2015 population estimates found here.